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An Alleged Money-Launderer Is Now Running Sars

A Hawks investigation is ongoing, but SARS commissioner Tom Moyane told HuffPost SA that Makwakwa would not be re-suspended pending the conclusion of the criminal investigation.

The South African arm of a leading multinational law firm, Hogan Lovells, has failed to investigate the key money-laundering allegations against SARS executive Jonas Makwakwa.

Makwakwa returned to work last week after a year’s paid suspension pending the investigation.

Instead, it found him guilty of a relatively minor misdemeanor of failing to declare outside interests after Makwakwa made cash deposits worth millions of rands into his accounts.

Hogan Lovells confirmed this in a statement to HuffPost SA.

Cash deposits by high-profile public servants such Makwakwa raise red flags across the banking system since they are meant to be on fixed salaries with predictable incomes paid straight into their accounts.

South Africa’s money-laundering regulator, the Financial Intelligence Centre, called the deposits suspicious and said they should be investigated for possible criminal activity.

A Hawks investigation is ongoing, but SARS commissioner Tom Moyane told HuffPost SA that Makwakwa would not be re-suspended pending the conclusion of the criminal investigation.

Moyane did not even abide by Hogan Lovells’ recommendation that Makwakwa faces disciplinary action for failing to declare his freelance earnings. Instead, the taxman appointed a Durban advocate Terry Motau and he found that Makwakwa had done no wrong.

Makwakwa was last week returned to the apex of SARS where he and Moyane are attempting to fix an R50.8-billion hole in the fiscus. This means that an alleged money-launderer is now running one of South Africa’s most important institutions.

SARS is tasked with preventing the tax losses that come from sophisticated tax planning laid bare this week in the #ParadisePapers leak of information from Appleby, the company that helped global multinationals pay the lowest possible tax by moving money around the world.

This week, Finance Minister Malusi Gigaba said a commission of inquiry would be appointed to investigate what is ailing SARS. Gigaba has written to Moyane to request a copy of the Hogan Lovells report, which he has refused to give to either Parliament or to the Treasury.

HuffPost SA asked Hogan Lovells if its finding on Makwakwa did not risk it facing the opprobrium dished out to multinational companies like McKinsey, KPMG and SAP, which all failed their own internal systems of investigation or procurement.

How could it, for example, not consider the FIC findings against Makwakwa if its investigation was genuinely independent?

Hogan Lovells SA chairperson Lavery Modise said: “The scope of the investigation conducted by Hogan Lovells was limited to identifying whether any misconduct had been committed by Makwakwa and Elskie [Kelly-Ann Elskie is Makwakwa’s wife] as employees of SARS.

It did not seek to directly investigate the financial transactions identified by the FIC. We understand that all criminal-related allegations arising from the FIC report were referred to the relevant authorities for investigation.

Hogan Lovells is a leading global multinational law firm with offices in most of the world’s major capitals. Its website says its values commit it to the highest levels of integrity.